138. The Peter-Principle, Sales-Rep Solution(s)

The Peter Principle?

The book, “The Peter Principle”, was first published in ’69. It was a #1 non-fiction, best-seller for 20 weeks. The key concept: most everyone gets promoted until they reach their level of incompetence where they stay, bumble, and resist any real changes. (A humorous writing style helps the medicine go down.)    

“The Sales Force Won’t Stand for Change X”

Because of Amazon’s innovations and effects, legacy distributors must make big, business-model changes (including field selling) over the next few years. But, senior, Peter-Principle reps will resist. For example, a client’s commissioned sales force wanted no policy changes for fixing small customers with (on average) small, unprofitable orders.  

Instead of tackling this problem generally, we analyzed each rep specifically to look for personal solutions.  

Rank Reps Multiple Ways; Define Their Problems; Let Specific Solutions Emerge

Using customer/SKU net-profitability analytics and other criteria, we concluded that 30% of the reps would not be rehired today knowing what we now know and our envisioned plans. Ah but, these reps were mostly veteran, loyal, “good people”.

These reps typically had net-unprofitable territories.  Only 1-4% of their accounts were larger and profitable, but often under-penetrated. Most other accounts were too small in margin dollar potential (and non-growing) to support the cost of regular rep calls to have a “relationship”.  

One rep got zero business out of the top 10+ biggest potential accounts in his home town, which was an hour away from the Center City warehouse. And, he had failing health issues.

Emergent Solutions

One small-customer, small-order rep was let go with a successful out-placement. The failing-health chap got off the road to become a telemarketer with more than twice his former active accounts. They were all the small accounts from three territories: his; the ex-rep’s; and some from a Star rep’s territory. This new telemarketing territory – with model changes – became net-profitable.

The Star, who lived in Center City, was paid a year’s commissions for the small accounts he yielded. And, he was assigned 20 new, big and target accounts from the two former territories. A corporate VP and a  “make-it-happen” inside branch person teamed up with the star to explode the sales from these big target accounts over the next year.

What are you doing to be ready for e-selling in 2020 and beyond? 

For More On Rethinking Sales Territories and Incentives:

Check out this link: http://merrifieldact2.com/downsize-sales-force-capacity-pay-on-customer-profitability/

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